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Surveillance as a solutionto conduct and ethics risks
How are businesses usingsurveillance to tackle non-financial misconduct?
In August 2023, U.S. regulators issued some of the most severe messaging yet around a “zero-tolerance” approach to a “culture of compliance,” driven partly by frustration around the lack of progress in controlling off-channel communications.
In February 2024, the FCA issued surveys to insurers and agents requesting data related to incidents of non-financial misconduct. In particular, the U.K. regulator requested information surrounding the number of non-financial misconduct incidents recorded, and the outcomes of those incidents, including bullying, sexual harassment, and discrimination.
With this in mind, we asked respondents whether they are using communications surveillance to identify conduct and culture risks.
Almost 80% of respondents said that they are employing surveillance tools as a means to monitor bad culture. When split by jurisdiction, it is clear that this is much more prominent in global and North America-based firms.
There is an increasing realization in the industry of the need to be more predictive and proactive around misconduct and the role poor culture can play.
This is why we have witnessed the emergence of RegTech solutions underpinned by behavioral science and social network analysis. However, these come at a price – not just the cost of licenses and integration – but in terms of resources and ongoing capacity to analyze and assess the resultant data.
It is unsurprising therefore, that firms are increasingly leveraging their existing surveillance platforms – and teams – to pinpoint poor culture while also using the same platforms to monitor for potential market abuse and to support formal investigations.
Emma Parry, Senior Advisor on conduct, culture, and risk
